Palestinian officials criticized a US decision to halt all funding to a UN agency that helps Palestinian refugees.

A spokesman for Palestinian President Mahmoud Abbas denounced the decision as “a flagrant assault against the Palestinian people and a defiance of UN resolutions.”

State Department spokeswoman Heather Nauert said the business model and fiscal practices of the United Nations Relief and Works Agency for Palestine Refugees (UNRWA) made it an “irredeemably flawed operation,” Reuters reported.

“The administration has carefully reviewed the issue and determined that the United States will not make additional contributions to UNRWA,” she said in a statement.

The latest announcement comes a week after the administration said it would redirect $200 million in Palestinian economic support funds for programs in the West Bank and Gaza.

UNRWA spokesman Chris Gunness voiced the agency’s “deep regret and disappointment” at the decision, which he said was surprising given that a December US funding agreement had acknowledged UNRWA’s successful management.

“We reject in the strongest possible terms the criticism that UNRWA’s schools, health centers, and emergency assistance programs are ‘irredeemably flawed,’” Gunness added in a series of Twitter posts.

The 68-year-old agency says it provides services to about five million Palestinian refugees in Jordan, Lebanon, Syria and the West Bank and Gaza. Most are descendants of people who were driven out of their homes or fled the fighting in the 1948 war with Israel.

US President Donald Trump and his aides say they want to improve the Palestinians’ plight, as well as start negotiations on an Israeli-Palestinian peace agreement.

But under Trump, Washington has taken a number of actions that have alienated the Palestinians, including the recognition of Al-Quds as Israel’s capital.

The United States paid out $60 million to UNRWA in January, withholding another $65 million, from a promised $365 million for the year.

“Such a punishment will not succeed to change the fact that the United States no longer has a role in the region and that it is not a part of the solution,” Abbas spokesman Nabil Abu Rdainah told Reuters.

He said “neither the United States nor anybody else will be able to dissolve” UNRWA.

In Gaza, Hamas condemned the US move as a “grave escalation against the Palestinian people.”

“The American decision aims to wipe out the right of return and is a grave US escalation against the Palestinian people,” said Hamas spokesman Sami Abu Zuhri.

He said the “US leadership has become an enemy of our people and of our nation and we will not surrender before such unjust decisions.”

Earlier on Friday, German Foreign Minister Heiko Maas said Germany would increase its contributions to UNRWA because the funding crisis was fueling uncertainty. “The loss of this organization could unleash an uncontrollable chain reaction,” Maas said.

UNRWA has faced a cash crisis since the United States, long its biggest donor, slashed funding earlier this year, saying that the agency needed to make unspecified reforms and calling on the Palestinians to renew peace talks with Israel.

The last Palestinian-Israeli peace talks collapsed in 2014, partly because of Israel’s opposition to an attempted unity pact between the Fatah and Hamas Palestinian factions and Israeli settlement building on occupied land that Palestinians seek for a state.